Leading debtor finance provider, Bibby Financial Services - Flexible Cash Flow Solutions has welcomed RBA’s recent 2.75% rate cut but warns that any rise in business taxes in the upcoming Budget or cuts to business concessions could push many small businesses to lay off workers or into bankruptcy.
With the Federal Government’s revenue for 2012/13 expected to decline by as much as $17 billion, it is now considering all revenue-raising options, including higher taxes on business to help minimise the Budget deficit.
According to Gary Green, National Sales Director, Bibby Financial Services, any rise in business taxes or cuts to small business tax concessions or programmes in this Budget would hit small businesses hard at precisely the wrong time.
In addition to a lacklustre economic growth and an uncertain global economy, small businesses are burdened by too much red tape as well as political and policy uncertainty, leading to cash-flow difficulties.
Mr Green points out that any further hit in this Budget would force some small businesses to shelve employment plans, lay off workers or cut back on their capital spending, which would hit confidence hard and stunt economic growth and a broader recovery, particularly in non-mining states.
This week’s Dun & Bradstreet National Business Expectations Survey shows actual business investment for the March quarter of 2013 dropped to its lowest level since early 2009 just after the global financial crisis. While lower interest rates should help to offset further deterioration, the Federal Government needs to do more to promote business confidence and certainty in this Budget. If this is not done, the unemployment rate may climb well over 6%.
The Reserve Bank’s recent credit data highlights the huge lack of business confidence. Business credit was up by just 1.6% over the year to March, below overall credit growth of 3.2% and well behind housing credit growth of 4.4%.
The latest Bibby Barometer survey reveals small businesses would like to see reduced taxes in next week’s Budget (51%), a reduction in Government red tape (40%) and relaxed import/export regulations (20%).
Bibby’s 2013 pre-Budget wish-list:
- Continuation of Government SME support programs without cuts
- No increase in business taxation to cover for budget deficit at the expense of small business
- Spending programs to be funded out of consolidated revenue rather than tax rises
- Minister dedicated to Small Business portfolio